Correlation Between Premier Foods and Kellanova
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Kellanova at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Premier Foods and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods Plc and Kellanova, you can compare the effects of market volatilities on Premier Foods and Kellanova and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Premier Foods with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Kellanova.
Diversification Opportunities for Premier Foods and Kellanova
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Premier and Kellanova is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Premier Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Premier Foods Plc are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Premier Foods i.e., Premier Foods and Kellanova go up and down completely randomly.
Pair Corralation between Premier Foods and Kellanova
Assuming the 90 days horizon Premier Foods Plc is expected to generate 1.72 times more return on investment than Kellanova. However, Premier Foods is 1.72 times more volatile than Kellanova. It trades about 0.11 of its potential returns per unit of risk. Kellanova is currently generating about 0.05 per unit of risk. If you would invest 132.00 in Premier Foods Plc on November 2, 2024 and sell it today you would earn a total of 76.00 from holding Premier Foods Plc or generate 57.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 40.69% |
| Values | Daily Returns |
Premier Foods Plc vs. Kellanova
Performance |
| Timeline |
| Premier Foods Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kellanova |
Premier Foods and Kellanova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Kellanova
The main advantage of trading using opposite Premier Foods and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Kellanova can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kellanova will offset losses from the drop in Kellanova's long position.| Premier Foods vs. Torque Lifestyle Brands | Premier Foods vs. Naturally Splendid Enterprises | Premier Foods vs. Aryzta AG PK | Premier Foods vs. Premier Foods Plc |
| Kellanova vs. Campbell Soup | Kellanova vs. ConAgra Foods | Kellanova vs. Hormel Foods | Kellanova vs. Kraft Heinz Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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